Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (March 2020)
39 slides from Owens Corning's roadshow presentation, Mar 19, 2020
Slide 1: Focused on Shareholder Value
Q1 2020 FOCUSED ON This presentation shared at the following events: SHAREHOLDER VALUE 03/19/20 OC (Virtual) Roadshow Hosted by Zelman – Boston/Toledo Brian Chambers | Chief Executive Officer 03/11/20 OC Roadshow – Texas Brian Chambers | Chief Executive Officer 03/04/20 Evercore ISI Housing Symposiu
Slide 2: Forward-Looking Statements and Non-GAAP Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation and the associated remarks contain forward-looking statements. We caution you against relying on these statements as they involve risks and uncertainties that are difficult to predict and the Company’s actual results may differ mater
Slide 3: Agenda
AGENDA 1 Investment highlights 2 Three strong businesses 3 Additional financial information 3
Slide 4: Owens Corning at a Glance
OWENS CORNING AT A GLANCE 19,000 2019 REVENUE EMPLOYEES COUNTRIES WHERE CONSECUTIVE YEARS WE OPERATE AS A FORTUNE® 500 COMPANY Serving residential, commercial, and industrial markets INSULATION | ROOFING | COMPOSITES Note: Data as of 2019 Form 10-K 4
Slide 5: Compelling Investment Thesis
COMPELLING INVESTMENT THESIS We are a global building and industrial materials leader that capitalizes on market-leading positions and innovative technologies to deliver substantial free cash flow and sustainable shareholder value MARKET-LEADING POSITIONS STRONG CASH FLOW GENERATION INNOVATIVE PRODU
Slide 6: Global Businesses in Attractive End Markets
GLOBAL BUSINESSES IN ATTRACTIVE END MARKETS Owens Corning revenue by end market 2019 revenue by end market Insulation Roofing Composites $5.4B $7.2B 4% 2% 17% 33% 6% 6% 11% 17% 26% 20% 41% 57% 33% 30% 9% 35% 24% 84% 33% 12% 2006 2019 U.S. residential new U.S residential repair U.S. commercial and In
Slide 7: Purposeful Actions Have Resulted in Sustainable Improvement
PURPOSEFUL ACTIONS HAVE RESULTED IN SUSTAINABLE IMPROVEMENT Management actions Enterprise improvement Operating priorities Implemented sustainable cost 2016 - 2019 Accelerate organic reductions across businesses growth 2013 - 2015 2006 - 2012 Invested in process and 13% Drive improved product techno
Slide 8: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 9: Three Market-Leading Businesses
THREE MARKET-LEADING BUSINESSES $7,160 $828 12% OWENS CORNING 2019 ADJ EBIT / EBIT 2019 NET SALES 2019 ADJ EBIT / EBIT AS % OF NET SALES #1 in North American residential fiberglass Insulation A leader in technical insulation growth $2,668 $230 9% markets #2 in attractive industry generating strong $
Slide 10: Well-Positioned to Capture Growth from Key Secular Trends
WELL-POSITIONED TO CAPTURE GROWTH FROM KEY SECULAR TRENDS ENERGY EFFICIENCY PRODUCT SAFETY & RENEWABLE ENERGY INVESTMENT IN RISING LABOR COSTS & SUSTAINABILITY INFRASTRUCTURE WORKER SHORTAGE Building code Easy and efficient Fire resistant Wind turbines Roads, bridges compliant installation Full temp
Slide 11: Innovative Product & Process Technologies
INNOVATIVE PRODUCT & PROCESS TECHNOLOGIES DELIVERING REVENUE GROWTH, IMPROVED MARGINS, AND CAPITAL EFFICIENCY DURATION® SPECIALTY GLASS ECOTOUCH® SHINGLES NON-WOVENS INSULATION Unique SureNail® Industry-leading Glass material technology product designs science Sustainable high Highly-specified Advan
Slide 12: Leveraging Enterprise Capabilities
LEVERAGING ENTERPRISE CAPABILITIES Commercial strength Material science innovation ROOFING COMPOSITES Manufacturing technologies Global footprint and scale INSULATION Safety and sustainability 12
Slide 13: Free Cash Flow Conversion Outperforms Peer Group
FREE CASH FLOW CONVERSION OUTPERFORMS PEER GROUP Average 2016-19 free cash flow conversion 125% Strong earnings performance 100% 75% Purposeful working capital management 50% Focused on operating 25% and capital efficiency 0% 2016-2019 Dow Jones U.S. Construction Owens Corning & Materials Index Free
Slide 14: Focused on Key Drivers of Shareholder Value Creation
FOCUSED ON KEY DRIVERS OF SHAREHOLDER VALUE CREATION Revenue growth Adjusted EBIT margin 12.5% 13.1% 13.4% 10.5% 12.2% 11.6% 10.3% 6.1% 1.7% 1.5% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Free cash flow ($mm) Return on capital $679 11.9% 12.2% $570 $590 10.2% 9.3% 9.1% $341 $266 2015 2016 20
Slide 15: Capital Allocation Strategy Focuses on Increasing TSR
CAPITAL ALLOCATION STRATEGY FOCUSES ON INCREASING TSR 2016-2019: RETURNED OVER $1B OF CASH TO SHAREHOLDERS Capital allocation strategy Capital allocation targets over time Maintain investment grade balance sheet 2-3X debt/EBITDA leverage with flexibility to support growth and drive shareholder value
Slide 16: Significant Recognition for ESG Leadership
SIGNIFICANT RECOGNITION FOR ESG LEADERSHIP Ranked Industry Leader seven Earned the following ISS scores in 2019: years consecutively in the Building • Environmental: 1 Products Group (top scores in • Social: 1 environmental, social and • Governance: 2 economic for 3rd year in a row) Included in CDP’
Slide 17: Three Strong Businesses
THREE STRONG BUSINESSES
Slide 18: Insulation Business
INSULATION BUSINESS Five-year financial performance Leverage broad portfolio in $3,000 12% commercial and industrial $2,500 10% markets around the world $2,000 8% U.S. residential construction $1,500 6% macro environment below $1,000 4% historical averages $500 2% Drive competitive advantage $0 0% 2
Slide 19: Built a Stronger Global Insulation Business
BUILT A STRONGER GLOBAL INSULATION BUSINESS NORTH AMERICA EUROPE CHINA TEMPERATURE RANGE HIGH MID LOW PAROC® is a registered trademark for mineral wool insulation 19
Slide 20: Built a Stronger Global Insulation Business
EXPANDED TECHNICAL AND OTHER BUILDING INSULATION TO DELIVER MORE STABLE AND ATTRACTIVE MARGINS Insulation EBITDA and margins North America residential fiberglass insulation Insulation delivered 19% average 400 Technical and other building insulation EBITDA margin over the period 1985-2008 300 Acquis
Slide 21: Roofing Business
ROOFING BUSINESS Five-year financial performance Track record of strong $3,000 25% operating performance $2,400 20% Positive outlook based on product preference and $1,800 15% market drivers $1,200 10% Components business growing above market with $600 5% attractive margins $0 0% Commercial & operat
Slide 22: Positive Outlook for U.S. Asphalt Roofing Demand
POSITIVE OUTLOOK FOR U.S. ASPHALT ROOFING DEMAND Major storms & Remodeling New construction weather events + + = Aging housing stock Housing activity below long ~40mm square average storm term averages provides market in last 10 years Economic factors: existing growth opportunity home sales, home eq
Slide 23: Remodeling & New Construction Markets Have Been Growing
REMODELING & NEW CONSTRUCTION MARKETS HAVE BEEN GROWING U.S. asphalt shingle market in mm squares New construction Remodeling Weather events Major storms 15 12 15 13 19 11 4 34 24 26 6 6 6 30 24 28 31 34 30 23 74 77 79 65 68 63 59 58 60 61 11 14 17 18 19 20 21 22 22 11 2010 2011 2012 2013 2014 2015
Slide 24: Composites Business
COMPOSITES BUSINESS Five-year financial performance $2,500 15% $2,000 12% Favorable industry trends $1,500 9% Well-positioned to leverage market growth with a capital- $1,000 6% efficient strategy $500 3% Glass non-wovens is an attractive business with strong $0 0% reinvestment economics 2015 2016 2
Slide 25: Glass Fiber – An $8B Market with Favorable Exposure
GLASS FIBER – AN $8B MARKET WITH FAVORABLE EXPOSURE Building & Consumer Industrial Power & Energy Transportation Construction Size Glass fiber market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns. Sources: Fiber Economics Bureau, GlassFibreEurope (
Slide 26: Positioned to Compete Anywhere in the World
POSITIONED TO COMPETE ANYWHERE IN THE WORLD #1 Position Emerging position Europe 28% China 23% 27% #1 Position 10% Americas % Market % OC 49% Revenue Revenue % Market % OC 32% Revenue Revenue % Market % OC Revenue Revenue #1 Position Rest of World 18% 13% % Market % OC Glass Non-Wovens Revenue Reven
Slide 27: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION
Slide 28: Appendix A: Key Financial Data – Corporate
APPENDIX A: KEY FINANCIAL DATA – CORPORATE ($ in millions, except per share data) Q4 2019 Q4 2018 FY 2019 FY 2018 Net sales 1,692 1,724 7,160 7,057 Net earnings attributable to Owens Corning 73 171 405 545 Diluted earnings per share (EPS) attributable to Owens $0.66 $1.55 $3.68 $4.89 Corning common
Slide 29: Appendix A: Key Financial Data – Business
APPENDIX A: KEY FINANCIAL DATA – BUSINESS Insulation Roofing Composites ($ in millions) Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Net sales 723 732 529 546 480 481 EBIT 89 115 87 83 56 56 EBIT as % of net sales 12% 16% 16% 15% 12% 12% D&A 48 48 14 13 40 38 ($ in millions) FY 2019 FY 2018 FY 20
Slide 30: Appendix A: Disaggregated Revenue
APPENDIX A: KEY FINANCIAL DATA – DISAGGREGATED REVENUE Twelve Months Ended December 31, 2019 Reportable Segments ($ in millions) Disaggregation Categories Composites Insulation Roofing Eliminations Consolidated U.S. residential $ 269 $ 927 $ 2,375 $ (195) $ 3,376 U.S. commercial and industrial 614 6
Slide 31: Appendix B: Non-GAAP Reconciliation – Table 1
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 1 31
Slide 32: Appendix B: Non-GAAP Reconciliation – Table 2
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 2 32
Slide 33: Appendix B: Non-GAAP Reconciliation – Table 3
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 3 33
Slide 34: Appendix B: Non-GAAP Reconciliation – Table 4
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 4 34
Slide 35: Appendix B: Non-GAAP Reconciliation – Table 5
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 5 35
Slide 36: Appendix B: Non-GAAP Reconciliation – Table 6
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 6 36
Slide 37: Appendix B: Non-GAAP Reconciliation – Table 7
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 7 37
Slide 38: Appendix B: Non-GAAP Reconciliation – Table 8
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 8 38
Slide 39: Appendix B: Non-GAAP Reconciliation – Table 9
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 9 39